Nigerian woman standing in front of her shop

The financial inclusion community has been long focused on supporting MSEs, but financial service providers and funders tend to view the entire MSE sector as monolithic, without considering the diversity of firms within that universe, often leading to one-size-fits-all solutions, with unclear impact pathways. In reality, MSEs have a variety of entrepreneurial motivations and journeys, differing financial and nonfinancial needs, diverse experiences in accessing financial services, and a range of attitudes towards digital adoption. This diversity also obfuscates the true impacts of access to finance on MSEs, leading to frequent claims of “mixed and modest” impacts. Effective segmentation can help identify both low-hanging fruits and hard to reach last-mile customers, define market opportunities for providers and support approaches for funders, and inform more nuanced impact hypotheses.


This paper is based on primary research conducted with 383 micro and small enterrpises (MSEs) in India, Kenya, and Peru – three diverse emerging markets with a vibrant MSE finance ecosystem that includes strong incumbent providers like microfinance institutions, cooperatives, and banks, as well as innovative new providers like fintechs.
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